ROI (Return on Investment) From Cloud Computing

ROI (Return on Investment) from Cloud Computing

A business organization often measures the value of investments or any move that requires money in terms of the return on investment (ROI). Perhaps it is the only reason that top management will agree to any proposal, especially bold ones like adapting the relatively new and untested cloud computing paradigm. Businesses have a habit of only embracing what is proven and tested while disregarding the possibilities and rewards of embracing new systems and methods. Though, I have to admit that more and more organizations are becoming bolder and starting to embrace new technology, especially the relatively new and smaller ones who are just getting into the business. These are the ones that have less to lose because they have not invested in older systems which are considered as lost investment when abandoned, and they can start fresh with new systems not weighted down with the familiarity of old ones.

Though it is quite difficult to calculate ROI from using cloud computing, we can start by finding returns in the three major benefits area for adapting cloud computing: Productivity enhancement, cost reduction and revenue transformation.

  • Cost savings from using cloud services – after doing categorization on the organization’s applications, they can estimate potential savings by shifting to cloud services. One way is migrating ERP resources into a public/private cloud infrastructure. Through virtualization and consolidation, they can reduce the number of servers running in-house and reduce the number of racks used significantly. This can generate up to 70% ROI for a Tier 3 workload and about 50% for Tier 1.
  • Cost Savings from Labor and software – Huge savings can be had through the labor reduction brought by reducing hardware infrastructure. This includes savings from the development and maintenance of applications and hardware. There is also a highly reduced need for installed software as cloud-hosted software can be made available to any workstation with an internet connection, which significantly lowers the required budget for software.
  • Cost savings from hosting – the spending budget for hosting infrastructure is made evident quickly. Hosting in-premises means acquiring your own hardware which is considered as a capital expenditure and could be quite large. While availing of cloud hosting is considered as an operational expenditure because of its subscription or pay-per-use model.

But often, the ROI is not simply measured through the savings in terms of monetary value. The best measurement of the ROI of cloud computing is simply in its VALUE. ROI doesn’t always look very enticing especially when cloud computing is concerned. That is why administrators and CIOs should be looking at the apparent values that come in many forms when employing cloud computing. What they should be asking is “What do I expect to get if I use this service?” and similar value related questions, not monetary related ones. You can set up metrics to determine the apparent value that cloud computing services are able to provide.

Take for example the following:

  • The speed of adaptation and deployment of the cloud service versus the maintenance and upgrade costs and downtimes of the old system.
  • The general ease of use and dynamic usage afforded by the new system. How flexible will the new system be in terms of coping with the ever changing business needs and goals?
  • What are the risks involved with processing and storing data offsite and not having to worry about the back end of the systems?
  • The support and other value added services offered by the provider. Are there any at all?
  • What are the environmental impacts of sourcing our IT services from the cloud? Is there a positive outcome to more and more organizations having co-location of infrastructure?
  • What about the apparent savings and the hassle in paying utility bills?

It is true that ROI is important, but the monetary side should not be the only basis for ROI. The value add offered by cloud services should also be highly considered when contemplating the use of cloud computing, even if it is sometimes intangible.

By Abdul Salam

Sorry, comments are closed for this post.

Comic
InformationWeek Reveals Top 125 Vendors Taking the Technology Industry by Storm

InformationWeek Reveals Top 125 Vendors Taking the Technology Industry by Storm

InformationWeek Reveals Top 125 Vendors Five-part series details companies to watch across five essential technology sectors SAN FRANCISCO, Sept. 27, 2016 /PRNewswire/ — InformationWeek released its list of “125 Vendors to Watch” in 2017. Selected by InformationWeek’s expert editorial team, the companies listed fall into one of five key themes: infrastructure, security, cloud, data management and…

Part 1 – Connected Vehicles: Paving The Way For IoT On Wheels

Part 1 – Connected Vehicles: Paving The Way For IoT On Wheels

Connected Vehicles From cars to combines, the IoT market potential of connected vehicles is so expansive that it will even eclipse that of the mobile phone. Connected personal vehicles will be the final link in a fully connected IoT ecosystem. This is an incredibly important moment to capitalize on given how much time people spend…

Embedded Sensors and the Wearable Personal Cloud

Embedded Sensors and the Wearable Personal Cloud

The Wearable Personal Cloud Wearable tech is one avenue of technology that’s encouraging cloud connections and getting us all onto interconnected networks, and with the continued miniaturization and advancement of computing the types of wearable tech are always expanding and providing us with new opportunities. A few years ago, smartwatches were rather clunky devices with…

SWIFT Says Bank Hacks Set To Increase

SWIFT Says Bank Hacks Set To Increase

Bank Hacks Set To Increase SWIFT, whose messaging network is used by banks to send payment instructions worth trillions of dollars each day, said three clients were hacked over the summer and cyber attacks on banks are set to increase. The theft of $81 million in February from Bangladesh’s central bank using SWIFT messages rocked…

Security: Avoiding A Hatton Garden-Style Data Center Heist

Security: Avoiding A Hatton Garden-Style Data Center Heist

Data Center Protection In April 2015, one of the world’s biggest jewelry heists occurred at the Hatton Garden Safe Deposit Company in London. Posing as workmen, the criminals entered the building through a lift shaft and cut through a 50cm-thick concrete wall with an industrial power drill. Once inside, the criminals had free and unlimited…

Digital Transformation: Not Just For Large Enterprises Anymore

Digital Transformation: Not Just For Large Enterprises Anymore

Digital Transformation Digital transformation is the acceleration of business activities, processes, and operational models to fully embrace the changes and opportunities of digital technologies. The concept is not new; we’ve been talking about it in one way or another for decades: paperless office, BYOD, user experience, consumerization of IT – all of these were stepping…

The Cancer Moonshot: Collaboration Is Key

The Cancer Moonshot: Collaboration Is Key

Cancer Moonshot In his final State of the Union address in January 2016, President Obama announced a new American “moonshot” effort: finding a cure for cancer. The term “moonshot” comes from one of America’s greatest achievements, the moon landing. If the scientific community can achieve that kind of feat, then surely it can rally around…

Four Keys For Telecoms Competing In A Digital World

Four Keys For Telecoms Competing In A Digital World

Competing in a Digital World Telecoms, otherwise largely known as Communications Service Providers (CSPs), have traditionally made the lion’s share of their revenue from providing pipes and infrastructure. Now CSPs face increased competition, not so much from each other, but with digital service providers (DSPs) like Netflix, Google, Amazon, Facebook, and Apple, all of whom…

Cloud-based GRC Intelligence Supports Better Business Performance

Cloud-based GRC Intelligence Supports Better Business Performance

Cloud-based GRC Intelligence All businesses need a strategy and processes for governance, risk and compliance (GRC). Many still view GRC activity as a burdensome ‘must-do,’ approaching it reactively and managing it with non-specialized tools. GRC is a necessary business endeavor but it can be elevated from a cost drain to a value-add activity. By integrating…

Achieving Network Security In The IoT

Achieving Network Security In The IoT

Security In The IoT The network security market is experiencing a pressing and transformative change, especially around access control and orchestration. Although it has been mature for decades, the network security market had to transform rapidly with the advent of the BYOD trend and emergence of the cloud, which swept enterprises a few years ago.…

5 Reasons Why Your Startup Will Grow Faster In The Cloud

5 Reasons Why Your Startup Will Grow Faster In The Cloud

Cloud Startup Fast-tracking Start-ups face many challenges, the biggest of which is usually managing growth. A start-up that does not grow is at constant risk of failure, whereas a new business that grows faster than expected may be hindered by operational constraints, such as a lack of staff, workspace and networks. It is an unfortunate…

Why Cloud Compliance Doesn’t Need To Be So Overly Complicated

Why Cloud Compliance Doesn’t Need To Be So Overly Complicated

Cloud Compliance  Regulatory compliance is an issue that has not only weighed heavily on the minds of executives, security and audit teams, but also today, even end users. Public cloud adds more complexity when varying degrees of infrastructure (depending on the cloud model) and data fall out of the hands of the company and into…

Infographic Introduction – Benefits of Cloud Computing

Infographic Introduction – Benefits of Cloud Computing

Benefits of Cloud Computing Based on Aberdeen Group’s Computer Intelligence Dataset, there are more than 1.6 billion permutations to choose from when it comes to cloud computing solutions. So what, on the face of it, appears to be pretty simple is actually both complex and dynamic regardless of whether you’re in the market for networking,…

Explosive Growth Of Data-Driven Marketing

Explosive Growth Of Data-Driven Marketing

Data-Driven Marketing There is an absolute endless amount of data that is being accumulated, dissected, analyzed with the important bits extracted and used for a number of purposes. With the amount of data in the world has already reached into multiple zettabytes annually. A Zettabyte is one million petabytes or one thousand exabytes. With data…

Cloud Infographic – Big Data Analytics Trends

Cloud Infographic – Big Data Analytics Trends

Big Data Analytics Trends As data information and cloud computing continues to work together, the need for data analytics continues to grow. Many tech firms predict that big data volume will grow steadily 40% per year and in 2020, will grow up to 50 times that. This growth will also bring a number of cost…

5 Considerations You Need To Review Before Investing In Data Analytics

5 Considerations You Need To Review Before Investing In Data Analytics

Review Before Investing In Data Analytics Big data, when handled properly, can lead to big change. Companies in a wide variety of industries are partnering with data analytics companies to increase operational efficiency and make evidence-based business decisions. From Kraft Foods using business intelligence (BI) to cut customer satisfaction analysis time in half, to a…